For decades, the wealthy have been cheating American taxpayers. Here are four ways rich people avoid paying taxes and keep getting away with it. If you actually believed the rich and the Republicans, you might think they are suffering. Nothing could be farther from the truth.
In myriad ways, the wealthy have been cheating all decent taxpayers. Let’s take a stroll through some of the many ways rich people avoid paying taxes, while pretending they pay anything close to their fair share, and stomping around loudly as if they weren’t getting away with a big scam. But where do we start?
(1) Avoid paying taxes, while complaining about ‘unfair’ rates.
One of the most common noises made by the wealthy — with the complicity of the Republicans — is that they pay unfair amounts of income taxes. In fact, rich people avoid paying taxes on most of their income. That’s right, while the wealthy whine about their supposedly inflated tax rates, they don’t even come close to paying even their fair share. But how do they do this?
- They shift their money to capital gains, which is taxed at a rate of only 15%. But even that is too high for them.
- They create shell companies in offshore tax havens like the Cayman Islands and move their money offshore.
These tax havens are also known as “secrecy jurisdictions” — such as the British Virgin Islands, the Cayman Islands, Bermuda, the Bahamas, Panama, etc. Many of these places are actually loosely part of the United Kingdom, under the name of British Overseas Territories and Crown Dependencies. They include the Channel Islands of Jersey, Guernsey and the Isle of Man. All of these places feature strong secrecy and loose tax laws. These places prey on American taxpayers and the taxpayers from other countries as well.
The rich setup shell companies there and move their money to those jurisdictions, never to be seen or collected by the tax man again. In most of those places, not only is it illegal to reveal information regarding these offshore accounts, it’s against the law even to ask about them. In other words, their financial and legal systems are designed to help rich people avoid paying taxes
(2) Lobby?congress to keep the IRS from going after them.
Why doesn’t the IRS go after them, you ask? The answer is that the Republicans do everything in their power to stop the IRS from auditing the wealthy. They have consistently slashed the budget of the IRS so it does not have the funds to perform these complicated audits of offshore secrecy jurisdictions. That is part of the reason our economy is doing so poorly. The treasury is starved for cash because so many of the wealthy have decided to join their wealthy peers in evading taxes.
So, why do they whine about the allegedly high taxes they pay? Insurance, of course. They assume that eventually their sweet deal will end and that they will have to actually pony up. They are evading taxes now and laying the groundwork for not having to pay later. The problem is, you should never doubt how venal and willing to cheat their country the wealthy are. Talk to a Conservative and they all have reasons why we should promote austerity policies that punish the 99% while rich people avoid paying taxes.
(3) Threaten to leave…but don’t.
Yet, as we all know, taxes are the price we pay for living in a civilized society. The wealthy don’t care. They are citizens of the world. So why don’t they leave, renounce their citizenship and avoid the looming threat of being found out? Well, it’s a nasty world out there. They don’t want to expose their children to it. They want to keep their kids, and homes and businesses safe in the United States. Here, we [meaning other citizens, of course] pool our money together and pay for nice things like roads, a standing army, a court system that enforces contracts, an EPA that keeps pollution from making their children sick, an FDA that keeps antifreeze out of the milk, a CDC that nips pandemics in the bud. Around the world, the United States is rightly admired for all the things it does right–and for that reason people around the world are beating at your borders to get in.
The wealthy have no intention of leaving–they just want to have their cake and eat it too.
They think they shouldn’t have to pay for all that stuff. What stuff? You know — the “Welfare Queens and stuff”.
Never mind that the real welfare queens are businesses that go into localities and coerce the locals into giving them tax breaks and property tax breaks and even a cut of sales tax. No, the conservatives would never bring up that kind of corporate welfare. It destroys the nice narrative they’re spinning about poor people mooching … while rich people avoid paying taxes.
(4) Claim you?’built that’ … Even though we ALL did.
The Republicans were up in arms when President Obama said that during the 2012 Presidential campaign. They willfully misunderstood what he was talking about. But if you have people like the Republicans who practice “low-effort” thinking, it’s a chore to get them to understand. Let’s give it a try:
- If you have a factory, the roads are pretty useful to you. Your trucks move your goods over those roads to get to market. So, what would happen if all of us taxpayers stopped paying, say, gas taxes. Well, in short order the roads would fall apart. Now, the poor surely would not enjoy it but they could muddle through, getting around on mud roads. But the factory owner? She’s toast. She cannot get her trucks and goods to market on mud roads.
- Say all of us stopped pooling our tax dollars to pay for a standing army, police or fire. Well, eventually an invading army is going to cross our borders unchallenged and do you think they’re going to go after all those muddy poor people? Not a chance. They would head straight for our factory owner in her big mansion.
- What about schools? Who will work in that factory owner’s factories–without public schools to teach those workers, and schools before them to teach their teachers. If our rich factory owner had to pay for the schools and the teachers all by herself, in short order she would no longer be rich.
- What about electric utilities? Clean water? Research into medicines? A court system to enforce her business contracts? Well, obviously, without all those things, our rich people would rapidly deplete their bank accounts paying for all those things–not to mention bridges and sewers and all the rest.
Those things in toto — that’s what President Obama was referring to when he said: “You didn’t build that.” But — here’s the problem–it takes some intelligence to grasp that and, frankly, that’s just too much for these Conservatives to manage. It’s so much easier to think on the surface and ignore all that nuance.
Therein lies our problem, folks. When you have a segment of the population being willfully dumb–as the Conservatives are doing–it’s very hard to convince Joe the Plumber that we’re all better off if we work towards a society that takes care of everybody.
Instead we’re left with these stupid Republicans who think the wealthy are are “suffering,” even as rich people avoid paying taxes. They may indeed be suffering — but from stupidity.
Sources on how rich people avoid paying taxes:
- “Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich?and Cheat Everybody Else” and?”Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With The Bill“, both by David Cay Johnson, Pulitzer-Prize-winning reporter for the New York Times.
- “Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens” by Nicholas Shaxton.
Photo from www.bdonline.co.uk.
edited by eap
